Tesco Meeting Amid Sales Drop Fears

Tesco Meeting Amid Sales Drop Fears
|

A lively Tesco annual shareholder meeting today is likely to reveal sales coming under further pressure amid investor concern over its chairman and the pay-offs of its departed chief executive.

Shareholder body Pirc recommends that investors vote against the supermarket's remuneration report at the London meeting which allowed it to hand a £1.2 million pay-off to former boss Philip Clarke - on top of £764,000 in salary until mid-January.

Mr Clarke was given the leaving pay-off in February, despite the group's financial woes, while former finance director Laurie McIlwee was also paid about £1 million on leaving in addition to salary payments.

Tesco said it plans to claw back the leaving payment if it finds there was gross misconduct following the discovery of an accounting black hole.

But Pirc said: "Such service payments are particularly concerning as the track record of these two executives at the head of the company was particularly poor."

The current chief executive, Dave Lewis - who replaced Mr Clarke in September in a bid to restore the fortunes of the supermarket giant's core UK business - was paid £4.1 million in his first six months.

Pric also opposes the group's new chairman John Allan, who in February agreed to step down from the boards of electrical retailer Dixons Carphone and the Royal Mail to take up the post at Tesco.

He replaced Sir Richard Broadbent, who announced his resignation last October after a £263 million accounting blunder involving rebates to suppliers highlighted practices going back a number of years.

However, Mr Allan remains on the board of housebuilder Barratt Developments.

Pirc said a chairman of more than one large public company cannot effectively oversee both, particularly because at Tesco "the possibility of having to commit additional time to the role in times of crisis is ever present".

Annual figures in April showed Tesco suffered one of the biggest losses in corporate history as it reported a staggering £6.4 billion loss and warned of a tough challenge to return to profit growth this year.

A sales update is also expected to see first quarter like-for-like sales down around 2% - a further slide on the 1% fall in the previous quarter, although it would mark an improvement on a drop of 3.7% a year ago as the measures imposed by Mr Lewis begin to take effect.

In January, Tesco published the location of 43 loss-making stores that will close and shelved plans to open a further 49 stores.

Mr Lewis has also cut prices across hundreds of lines as the supermarket price war hots up as major grocers battle discounters such as Aldi and Lidl.

Other changes under Mr Lewis also include shutting Tesco's final salary pension scheme, disposing of its loss-making blinkbox operation selling online videos and moving its main headquarters from Cheshunt to Welwyn Garden City in a measure expected to save £250 million.